BILL NUMBER: AB 429 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 29, 1999
INTRODUCED BY Assembly Member Correa
FEBRUARY 12, 1999
An act to amend Section 24600 of add
Section 22404 to the Education Code, relating to the State
Teachers' Retirement System.
LEGISLATIVE COUNSEL'S DIGEST
AB 429, as amended, Correa. State Teachers' Retirement System:
benefits gain-sharing revenue .
Under the Teachers' Retirement Law, interest earned on assets of
the retirement fund that is not credited to accounts maintained
pursuant to the Defined Benefit Program, as defined, and other income
with respect to the program, is allocated to provide benefits under
the program. Existing law requires that an actuarial valuation of
the assets and liabilities of the State Teachers' Retirement Plan be
performed at least once every 6 years and that the Teachers'
Retirement Board report annually to the Legislature and Director of
Finance regarding the return on investments of the system.
This bill would provide that gain-sharing revenue, defined as the
annual investment return, interest, and other income with respect to
the Defined Benefit Program that exceeds the expected return for that
period provided in the most recent actuarial valuation of assets,
shall be allocated first to eliminate unfunded accrued actuarial
liabilities, as specified; then to reserves; and then to provide
increased benefits or credits against contributions for active and
retired members pursuant to future legislation, as specified.
Existing law, the State Teachers' Retirement System, sets forth
procedures for the accrual and termination dates of benefits and
allowances, including distributions from the Defined Benefit Program.
This bill would make technical, nonsubstantive changes to that
provision effective January 1, 2002.
Vote: majority. Appropriation: no. Fiscal committee:
no yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 24600 of the Education Code is
SECTION 1. Section 22404 is added to the Education Code, to read:
22404. (a) As used in this section:
(1) "Expected earnings" means the aggregate amount of the return
on investments, interest, and other earnings with respect to the
Defined Benefit Program that would have been received by the
retirement fund during any fiscal year if the fund's assets had
increased by the actuarially assumed interest rate used in the most
recent actuarial valuation of the assets and liabilities of the plan
performed pursuant to Section 22311.
(2) "Gain-sharing revenue" means the amount by which the actual
return on investments, interest, and other earnings with respect to
the Defined Benefit Program received by the retirement fund for any
fiscal year, as reported to the Director of Finance pursuant to
Section 22218.5, exceeds the expected earnings for the same period.
(b) Notwithstanding any other provision of law, the board shall
allocate gain-sharing revenue as follows in the following order of
priority:
(1) The amount necessary to eliminate any unfunded actuarial
accrued liability associated with benefits in effect on or before
July 1, 1980, shall be allocated to the appropriate accounts.
(2) An amount determined by the board, based on a recommendation
from the actuary, that adequately protects the fund in the event
future earnings fall below expected earnings shall be allocated to
reserves under this part.
(3) Any remaining gain-sharing revenue shall be allocated to
active member funds and retired member funds in the Defined Benefit
Program to provide improvements in benefits or credits for
contributions, or both, pursuant to any subsequently enacted
legislation that expressly refers to this section or otherwise
specifies that gain-sharing revenue shall be the source of funding
for those benefits or contributions. For purposes of this paragraph,
gain-sharing revenues shall be allocated proportionately to active
member funds and to retired member funds based on the percentage of
the actuarial accrued liability of the retirement fund with respect
to the Defined Benefit Program that is attributable (A) to actuarial
liabilities for future benefits payable to currently active and
inactive members, or (B) to actuarial liabilities for benefits
payable to currently retired members and their beneficiaries,
respectively. amended to read:
24600. (a) A retirement allowance under this part begins to
accrue on the effective date of the member's retirement and ceases on
the earlier of the day of the member's death or the day on which the
retirement allowance terminated for a reason other than the member's
death.
(b) A retirement allowance payable to an option beneficiary under
this part begins to accrue on the day following the day of the
retired member's death and ceases on the day of the option
beneficiary's death.
(c) A disability allowance under this part begins to accrue on the
effective date of the member's disability and ceases on the earlier
of the day of the member's death or the day on which the disability
allowance terminated for a reason other than the member's death.
(d) A family allowance under this part begins to accrue on the day
following the day of the member's death and ceases on the day of the
event that terminates eligibility for the allowance.
(e) A survivor benefit allowance payable to a surviving spouse
under this part pursuant to Chapter 23 (commencing with Section
23850) begins to accrue on the day the member would have attained 60
years of age or on the day following the day of the member's death,
as elected by the surviving spouse, and ceases on the day of the
surviving spouse's death.
(f) A child's portion of an allowance under this part begins to
accrue on the effective date of that allowance and ceases on the
earlier of either the termination of the child's eligibility or the
termination of the allowance. An allowance payable because of a
full-time student shall terminate on the first day of the month
following the end of the school quarter or semester that is in
progress in the month the full-time student attains 22 years of age.
Any adjustment to an allowance because of a full-time student's
periods of nonattendance shall be made as follows: the allowance
shall cease on the first day of the month in which return to
full-time attendance was required and shall begin to accrue again on
the first day of the month in which full-time attendance resumes.
(g) Supplemental payments issued under this part pursuant to
Sections 24701, 24702, and 24703 to retired members, disabled
members, and beneficiaries shall begin to accrue pursuant to Sections
24701, 24702, and 24703 and shall cease to accrue as of the
termination dates specified in subdivisions (a) to (f), inclusive.
(h) Notwithstanding any other provision of this part or other law,
distributions from the plan with respect to the Defined Benefit
Program shall be made in accordance with Section 401(a)(9) of the
Internal Revenue Code of 1986, as amended, including the incidental
death benefit requirements of Section 401(a)(9)(G) and the
regulations thereunder, and the required beginning date of benefit
payments that represent the entire interest of the member in the
Defined Benefit Program shall be as follows:
(1) In the case of a refund of contributions, as described in
Chapter 12 (commencing with Section 23100) of this part, not later
than April 1 of the calendar year following the later of (A) the
calendar year in which the member attains 70 1/2 years of age or (B)
the calendar year in which the member terminates employment within
the meaning of subdivision (i).
(2) In the case of a retirement allowance, as defined in Section
22150, beginning not later than April 1 of the calendar year
following the later of (A) the calendar year in which the member
attains 70 1/2 years of age or (B) the calendar year in which the
member terminates employment within the meaning of subdivision (i),
to continue over the life of the member or the lives of the member
and the member's option beneficiary, or over the life expectancy of
the member or the life expectancy of the member and the member's
option beneficiary.
(i) For purposes of subdivision (h), "terminates employment" means
the later of the termination of employment subject to coverage by
the Defined Benefit Program or the termination of employment in a
position requiring or permitting membership in another public
retirement system in this state the compensation from which may be
included in final compensation under Section 22127.
(j) This section shall become operative on January 1, 2002.